This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

November 8, 2012

In Election’s Wake: What Now for Advisors?

TDAI offers some insight to changes at SEC, key congressional committees and 401(k)s

Dealings With Qualified Clients and Accredited Investors
Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.

TD Ameritrade Institutional attempted to answer on Wednesday, at least in the legislative and regulatory realm as it applies to advisors, by hosting a web seminar titled “What now? Post-election, what can we expect from Washington as it pertains to investors and financial advisors?”

Moderated by Skip Schweiss, president of TD Ameritrade Trust Co. and managing director of the custodian’s advisor advocacy efforts, the panel included Joel Oswald and Christopher Hatcher, principals with Williams and Jensen, a government affairs law firm based in Washington, as well as Brian Graff, executive director of the American Society of Pension Professional and Actuaries. The webcast reviewed the election results in the context of the impact to RIAs and their clients, specifically focusing on:

“Now that the election is over, we’ll see changes in leadership on the House Financial Services Committee with the likely focus being on oversight of the implementation and regulation of the Dodd-Frank Financial Reform Act,” Oswald said. “They’ll also look to reform government-sponsored enterprises.”

The Senate Banking Committee will also see changes, with new ranking members and speculation that Elizabeth Warren, who defeated Scott Brown for Massachusetts’ junior Senate seat, will join.

As to the Securities Exchange Commission and what the future holds for Chairman Mary Schapiro, Oswald said, “There’s been speculation that Schapiro will resign, but she’s downplayed that somewhat, saying she doesn’t have a departure date. If she does stay, her term will end in 2014, which is a very long time to run the SEC. Only four others have lasted that long.”

Now that President Obama has won, Oswald also said the Department of Labor will re-propose and move forward with a fiduciary rule under ERISA.

Graff (right) then took over to discuss what’s expected with tax reform, as well as incentives for retirement saving and investing.

“Boehner said in his news conference on Thursday that he would be open to tax increases, but only if they were in the context of larger tax reforms,” Graff said, referring to the current Speaker of the House, Rep. John Boehner.

Graff noted that contribution limits under 1986 tax reform legislation were slashed for 401(k)s and IRAs by as much as 70%, something he warned could happen again.

“The last time this happened, it devastated the IRA industry, and rather than encouraging people to participate in 401(k) plans, many sponsors were trying to shut them down,” Graff said. “Tax incentives and deductions cost the government a lot. They become targets at times like this, as they were in 1986.”

He pointed to what he describes as a grassroots effort started by ASPPA, called “Save My 401(k): Protect My Piggy,” to protect the tax-preferred status of retirement plans.

“There are 70 million Americans participating in 401(k) plans, and we want to have them call their representatives and tell them to protect the current tax structure within the plans,” Graff concluded.